Newly-elected governors are grappling with a problem that has received only intermittent attention in the past: pending bills.
For example, Laikipia Governor Ndiritu Muriithi has stated that his young administration has inherited Sh1.3 billion in pending bills, according to the Business Daily of September 12, 2017.
Isiolo Governor Mohammed Kuti is quoted in the Daily Nation of August 24, 2017 stating that his own fledgling administration has inherited Sh1 billion in these bills. Nor are pending bills from previous county administrations the only type of debt that counties must deal with. In April 2017, it was reported that county governments collectively owe Sh50 billion in debt inherited from the defunct local authorities.
What exactly is a pending bill in this case? It is a county / national government’s inherited obligation to pay a supplier or a lender. (For those who prefer accountant-speak, pending bills are the public sector’s equivalent of Accounts Payable.)
Pending bills can have the effect of crippling a county government’s ability to deliver meaningful change for its citizens. Let us take the example of Laikipia County.
According to the Annual County Governments Budget Implementation Review Report for the 2015/16 financial year (which report is issued by the Office of the Controller of Budget), Laikipia County’s development expenditure in the 2015/16 financial year was Sh1.3 billion.
In other words, paying the pending bills has the potential to wipe out Laikipia County’s entire development expenditure for one year, reducing the new governor’s five-year tenure to four in development terms.
Referencing the same report, we find that this dire situation repeats itself in Isiolo, where the Sh1 billion worth of pending bills compares almost exactly with the Sh1.1 billion worth of development expenditure in that county’s 2015/16 financial year.
It is clear, therefore, that pending bills must be dealt with to prevent them from becoming an albatross around the necks of well-meaning administrators.
In 2005 President Mwai Kibaki appointed a Pending Bills Closing Committee to conduct a forensic audit of all claims against the national government and recommend how such debts would be resolved.
This approach shows the way out: incoming administrations must carry out a review of the completeness of the pending bills owed by the county.
Thereafter, they should conduct a review to ascertain the authenticity of pending bills that categorises all pending bills into regular pending bills or irregular pending bills, based on a number of factors, including whether or not the procurement that generated a pending bill adhered to existing laws on public procurement, and/or whether goods or services in question were delivered.
After completing this exercise, one must come up with a plan for dealing with those bills that have been confirmed to be regular.
Samuel Marete is a manager with PwC Kenya’s Forensic Services.